California Law AB 1672 Explained
California law AB 1672 was passed in 1992, but you may have never heard about it- unless you needed it. With all the recent talk of healthcare reform, you may be wondering what is California law AB 1672 and what does it mean to you?
California Law AB 1672 in a Nut Shell
California law AB 1672 is actually an improvement on the federal government’s HIPAA, Health Insurance Portability and Accountability Act. Some legislators even tout the law as being a forerunner of the future of healthcare reform in America.
This law:
- Allows individuals with pre-existing medical conditions to change over to a newer group health plan without an exclusionary period;
- Ensures small businesses, professional organizations, and associations have access to health plans as long as they have between 2 and 50 full time employees;
- Protects the insured from an increase in insurance rates after filing an insurance claim;
- Allows employees with health problems to change jobs and/or health plans without fear of being penalized for pre-existing conditions.
Life Before AB 1672
Before the law took effect, employers often faced denied coverage due to aging employees, or employees with serious medical coverage, or if they employed to few eligible enrollees. They lived in fear of cancellation of health benefits if they filed a claim (actually used the health insurance they paid for), or if premiums were raised beyond the breaking point forcing the employer and employees to cancel the health plan.
If one employee became sick, the entire company risked losing health benefits. Pricing was not uniform between small businesses and larger companies. Some small companies were paying twice as much for the same amount of health care that larger companies were receiving.
Many families carried double insurance to guard against the loss of coverage if one spouse were to get fired or change jobs. Families also lived in fear of losing coverage for a child or spouse if they became ill or permanently disabled.
Consequently, more than 2/3 of small businesses were unable to offer health insurance benefits to employees, leaving individuals and families unprotected unless they could afford privately funded health insurance. Those who could afford health insurance had to settle for traditional health plan that covered less and came with higher premiums instead of choosing from group health plans.
AB 1672 Changes Life for the Better
Now, under the new law, more California residents have access to group health plans and are protected from skyrocketing premiums and cancellation if they become ill or injured. Small businesses can choose between group health plans with affordable premiums. In addition, employees whose employers decline to offer health insurance are not left high and dry. They can opt for group health plans provided through professional organizations, trade associations, and civic groups.
California Law AB 1672 in Action: How it Works
Employees who are eligible for protection under AB 1672 must:
- Be residents of California
- Be considered full-time; or in some cases, working at least 20 hours per week
- Be employed by or belong to a business or organization offering group health plans must have between 2-50 members or employees enrolling for coverage
- Not be enrolled in Medicare or MediCal
- Apply for benefits under a new employee within 30 days of losing the previous coverage (this does NOT include an employers mandatory probationary or waiting period for insurance coverage)
- Be employed by an employer who contributes to the cost of health insurance coverage
- Be employed by a business that has actively engaged in business for a minimum of six months prior to filing for health insurance eligibility under AB 1672
California law AB 1672 protects your right to healthcare insurance. The details are complicated, but the bottom line is that AB 1672 is one assembly bill that has changed the way California residents view health insurance for the better.